Summarize this content to 2000 words in 6 paragraphs Stocks in Russia’s markets and the ruble, the country’s currency, are strengthening amid engagements between Moscow and Washington regarding potential peace talks for the war in Ukraine.The Moscow Exchange (MOEX) and the dollar-denominated RTS index rose on Monday, while the ruble hit a seven-month high against the dollar, fueled by optimism that the Trump administration may ease sanctions on Russia.Since December 17, the MOEX has climbed over 800 points, while the New York Stock Exchange (NYSE) has dipped nearly 300 points.Newsweek reached out to the Russian Finance Ministry for comment.Why It MattersThe United States and European Union sanctions imposed after President Vladimir Putin’s full-scale invasion of Ukraine were aimed at isolating Russia from the world’s financial system.The measures have caused turbulence in Russia’s economy, with high inflation and worker shortages. However, the prospect of Russian markets improving could play into Putin’s hands as he seeks to fund his war machine.
A screen shows the benchmark ruble-denominated MOEX index numbers at the Moscow Exchange office in Moscow on January 10, 2023.
A screen shows the benchmark ruble-denominated MOEX index numbers at the Moscow Exchange office in Moscow on January 10, 2023.
KIRILL KUDRYAVTSEV/Getty Images
What To KnowUpon opening on Monday, the MOEX index rose 1.71 percent to surpass 3,249 points, up 865 points from the 2,384 it registered on December 17.In the same time frame, the NYSE was 19,223 at opening on Monday—294 points less than the 19,517 registered on December 17.As of Monday, Russia’s dollar-denominated RTS index climbed 1.71 percent to exceed 1,196 points. This marks weeks of steady gains, driven by optimism ahead of a phone conversation that U.S. President Donald Trump said he would have with Putin last week amid speculation about Washington-led calls for a ceasefire in Ukraine.On Monday, the ruble reached 84 to the dollar, its strongest level since August 5. It has surged almost a third since the start of the year.As speculation mounts that Trump’s efforts to restore ties with Putin mean an easing of sanctions, hedge funds are positioning themselves for potential gains in Russian corporate bonds and the ruble, Financial Times reported.Sanctions have meant that trading in Russian sovereign debt remains off-limits, but some hedge funds are exploring corporate bonds once deemed nearly worthless, which are seeing improved valuations, according to Hedgeweek.com. The outlet added that hedge funds and brokers are looking at sanctions-compliant ways to profit from the shifting geopolitical landscape involving Russia.Vasily Astrov, a senior economist at The Vienna Institute for International Economic Studies, told Newsweek that a thaw in Russia-U.S. relations and the net effect of a peace deal could lead to more capital inflows to Russia.It might also persuade Western companies that had been “sitting on the fence” to stay in Russia and those that have already left to potentially return.Astrov also said that new U.S. investments in Russia, such as in energy production and metals, may materialize in the new geopolitical climate, reducing Moscow’s one-sided dependence on China.What People Are SayingFinancial Times: “Investors are turning to sanctions-proof bets on Russian bonds and the roble to wager that Donald Trump’s rapprochement with Vladimir Putin will send a wave of capital back into Russia’s economy.”Vasily Astrov, senior economist at The Vienna Institute for International Economic Studies: “A thaw in Russia-U.S. relations might persuade companies who were ‘sitting on the fence’ to stay in Russia and those who have already left to potentially return…the net effect of a peace deal would be rather more capital inflows to Russia.”What Happens NextSpeculation that sanctions against Russia could be eased has fueled investor interest in Russian assets, but sanctions on Russian banks and financial intermediaries mean that direct trading of the ruble remains difficult.Meanwhile, the ruble’s strength could influence the central bank’s upcoming policy decision. On March 21, the Bank of Russia will review its key interest rate, which currently stands at 21 percent.
